Several securities companies have halted operations or changed addresses without notice as a result of a lingeringly gloomy market.

Many securities companies have halted operations or changed addresses without notice

Securities firms have withdrawn from the market and gone into hibernation, as a way to avoid going out business.

Creeping away

Having no one to work in the headquarters of Hanoi Securities Corporation (HSSC) on the third floor of the Opera Building at 60 Ly Thai To in Hoan Kiem District of Hanoi, the company’s office phone numbers continue to ring unanswered and HSSC’s website remains unattainable.

In fact, HSSC has moved to a new location without official notice for over a month.

Many investors have become aware that the HSSC and some other securities firms have stopped transactions for a long time, halting almost all services and transferring their lists of clients to their partners.

In the lead up to the Tet holiday, HSSC stopped its security brokerage service from December 9, 2011. Most of its clients had withdrawn their money from their accounts at the company while the rest was transferred to the Thien Viet Securities Company.

The Hanoi Stock Exchange has suspended stock trading of HSSC upon its demand to facilitate its official withdrawal from both listed and UPCoM markets beginning from February 17.

HSSC’s withdrawal has shocked a large number of investors who had pumped hundreds of million and even billions of VND into the stock.

Self-elimination

This move has been replicated by many other securities companies.

After consecutively suspended trading due to an inability to make payments, the SME Securities Corporation had its license withdrawn from the Ho Chi Minh City Stock Exchange on February 10.

SME has also halted its securities brokerage service and closed its headquarters in HCM City.

Other securities firms like Gia Anh and Truong Son had also halted their securities brokerage operations.

Large numbers of both small and large-sized securities companies have closed branches and transaction offices, along with cutting their workforce and moving to a smaller headquarters.

Mekong Securities Company followed suit when it announced its intention to relocate its headquarter from HCM City’s District 1 to Hanoi’s Ngo Quyen Street. It also decided to close two branches and one transaction office.

Many experts had forecasted a gloomy future for a lot of securities firms as too many companies had been established, operating in a substandard stock market.

When the market thrived, many securities companies spent a large amount of money on buying equipment and facilities, office rental and sky-high salaries.

However, when the market slowed, many of them have incurred increasing losses amounting to tens or even hundreds of billions of VND.

HSSC’s equity had dropped to only VND15.7 billion (USD751,555) in late 2010 from an initial VND50 billion (USD2.39 million) while its incurred a combined loss of VND34.4 billion (USD1.64 million) for the 2008-2010 period.

During their operations, many securities companies had failed to retain investor confidence due to misusing client accounts for stock speculation to gain short-term profits.

When such wrongdoings were uncovered, investors rushed to withdraw money from their accounts, leaving the firms in difficulties amid a gloomy market.